Multifoods To Divest Consumer Division

September 09, 1986|By John Gorman.

International Multifoods Corp., the Minneapolis-based food giant, said Monday it was divesting its U.S. consumer foods group and certain other businesses while substantially expanding its investment in food service.

The company said the restructuring, which was approved by its board Friday, should mean a ``sizable gain`` for the company.

The company said sales of the businesses being sold were $187.5 million, or 20 percent of its U.S. net sales in the fiscal year ended Feb. 28. The firm had earnings of $24.9 million on sales of $1.36 billion last year.

Directors also approved the sale to General Mills Inc. of the company`s consumer flour and consumer pouch mix business in the U.S., including the Robin Hood trademark for use in connection with consumer products.

In addition, the company is selling its Morey`s fish-processing operation and two retail fish stores to a Minnesota company. Also, the company`s private pet food operations will be sold to Hubbard Milling Co. of Mankato, Minn. Terms were withheld.

``We want to be a leader in each area in which we compete. The food-service business is more compatible with Multifoods` capabilities, and the industry is less concentrated than consumer foods,`` said Robert M. Howard, Multifoods president.

The company said directors have approved the retention of Goldman Sachs & Co. to solicit bids for the sale of Adams Foods, a Tacoma, Wash.-based manufacturer of natural peanut butter products; Kaukauna cheese, a Little Chute, Wis.-based manufacturer of cold-pack cheese products; Kretschmer Cereals, a Manhattan, Kan.-based manufacturer of wheat germ products and Sun Country granola cereals; and Smoke Craft, an Albany, Ore.-based manufacturer of meat snacks and beef jerky products.

Over the last few years, Multifoods has acquired several food-service businesses with leading market positions in some segments of the $186 billion U.S. food-service industry.

The company said it would focus its resources on its two remaining market segments, food service and basic foods.

``They want to reorient their business to the food-service industry. There they don`t have to throw national advertising money to support some good regional brands to compete with companies like Kraft or Beatrice and their national brands,`` said Keith DeVore, an analyst with Piper, Jaffray & Hopwood Inc. in Minneapolis.

Multifoods` board also approved the disposition, as of the end of the year, of the 31 Hickory Farms of Ohio franchise specialty cheese stores operated by Multifoods` 80 percent-owned Food Enterprises Inc. subsidiary.

The company estimated that of its 5,000 full-time U.S. employees, 4 percent would lose their jobs when all the transactions are completed.

The board approved the acquisition of the net assets and business of Rotanelli Foods Inc., a New Rochelle, N.Y.-based manufacturer of frozen Italian foods for the food-service industry. Terms were withheld.

Rotanelli had sales of $21 million for the year ended May 31.

Multifoods will divest its company-owned seafood restaurants in the U.S. It said 10 Boston Sea Party restaurants would be operated by the company until a suitable buyer is found, and the remaining three restaurants and a single HMS Boston restaurant will be closed.

The board also approved a significant investment in a new processing facility for the Seafest brand surimi-based seafood alternative.

The firm will continue to operate its Reuben Meats and Feinberg Distributing businesses, which principally serve supermarket delicatessens.

The company said it would focus its resources on its two remaining market segments, food service and basic foods. The company estimated that of its 5,000 full-time U.S. employees, 4 percent would lose their jobs when all the transactions are completed.